The vegetable processing industry in Portugal: Successes and failures

The vegetable processing industry in Portugal: Successes and failures
Monteiro A.A.
in
Lauret F. (ed.).
Les fruits et légumes dans les économies méditerranéennes : actes du colloque de Chania
Montpellier : CIHEAM
Options Méditerranéennes : Série A. Séminaires Méditerranéens; n. 19
1992
pages 131-137
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-------------------------------------------------------------------------------------------------------------------------------------------------------------------------Monteiro A.A. Th e vegetable processin g in du stry in Portu gal: Su ccesses an d failu res. In : Lauret
F. (ed.). Les fruits et légumes dans les économies méditerranéennes : actes du colloque de Chania .
Montpellier : CIHEAM, 1992. p. 131-137 (Options Méditerranéennes : Série A. Séminaires
Méditerranéens; n. 19)
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The vegetable processing industry in Portugal:
Successes and failures
Antonio A.
Instituto Superiorde Agronomia, Lisboa (Portugal)
,
Résumé. Quelques exemples de succès er d't5checs de l'industrie des légumes au Portugal. Les succès et les échecs de
l'industrie de transformation des légumes au Portugal sont analysés icià travers quatre exemples :le concentré de tomate,les
pois surgelés, les haricots en conserve, divers légumes surgelés. La recherche, la quasi-intégration des agriculteurs par
contrat, l'adaptation des variétésau climat, la récolte mécanique sont des facteurs essentiels
du succès. Cependant, l'industrie
peut aussi être approvisionnée en complémentarité avec le marché des produitsfrais dans le
de légumes à haute valeur
ajoutée et cueillis à la main.
Abstract. The vegetable processing industryis different from the fresh market. The success
of this industry depends on a number
of factors related to existing farming systems but not necessarily on the climate. Four recent examples illustrate the variable
results of the vegetable processing industtyin Portugal: (a) success of tomato paste production owing to effective collaboration
between growers, processors, and research organizations; (b) rapid growth during the
of the frozen pea industry which
is well adapted to small-scale farming along the northwestern coast; (c) failure of
peacanning owing to poor adaptation of
bean
the crop to local farming systems; (d) start-up the frozen vegetable industry with processors facing some difficulties in raw
material supply. These examples show the importance of factors such as farmers' integration, research on new crops and their
adaptation, and competition between processing and the fresh market. Crop suitability
to established farming systems is a
basic requirement.In most situations vegetables for processing need fully mechanized cropping operations. Processing can be
combined as a complementary activity to the fresh market by using the surplus of high value hand-picked vegetables and fruit.
words. Vegetables - Processing - Industry - Portugal.
l
Introduction
Portugal has a long tradition of vegetable production for the fresh market that represents approximately
20% of the national agricultural value added
et al., 1985). Per capita vegetable consumption
(includingpotato) is 220 kg (Portas and Costa,1980). This high consumptionis partly due to a favorable
climate that allows year-round production of most commodities. Per capita consumption of processed
vegetables at 4 kg is rather low. But it is expected to increase as Portugal attains the same level of
economic development as in other Western European countries. Proccessed vegetables are commonly
used in these societieswith limited time for preparationof meals.
It would be useful to know whether Portugal can depend on local production to satisfy the growing
demand for processed vegetablesn
i the domestic market. The country has abundant
natural and human
resources for growing fresh vegetables, but they may not be adequate
to meet the specific requirements
for processed products.
Fresh vegetable production is based on the proximity
of a market or on conditions that ensure supply at
a certain time of the year. In contrast, processed vegetables can be easily transported over long
distances and stored for out-of-season consumption. The vegetable processing industry does not
depend on geographic location climatic shift. Processing competitiveness isrelated to the capacity to
produce good quality at low price during the most suitable period
of the year.
Interaction between fresh vegetables growers may be limited because of the variable market size and
wide range of commodities; moreover, growers have to rely on
their own ingenuity to supply the right
product at the most favorable price. The processing industry needs more coordination. Planning,
constant supply of raw materials, and uniform choice of cultivars are the rule. A processing plant is not
viable without a minimum cropped area, which implies contracting and coordination between growers
and processors.
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There are several reasons for the success or failure of vegetable production for processing in countries
having good expertise and long experience in growing vegetables for the fresh market. Listing some of
these reasons is not relevant to this seminar which aims to discuss and compare national experiences.
This paper describes some of the successes in vegetable processing in Portugal: tomato paste, frozen
peas, canned pea beans, and other frozen vegetables. Each analysis seeks to explain the specific
problems related to vegetable processingas an alternative to the fresh market.
I.
- Tomato for processing
Portugal is a major producer of tomato for processing and the fifth largest exporter in the world. The
history of the sector in Portugal is a good example of success due to collaboration between growers,
processors, and research institutions. It is outlined in the review of the tomato processing industry by
Portas et al. (1986),on which some of the following observations are based.
Production of tomato paste in Portugal startedin 1939 in the Tagus valley using surplus from supplies to
the fresh market. In 1939 about 300 ha were planted producing 800 t of paste (Table 1). Difficulties in
marketing and poor product quality slowed down subsequent development. By 1956a joint effort by the
national fruit and vegetable board, JNF; private processors including
H.J. Heinz and Campbell Soup; and
extension officers from the Ministry of Agriculture succeeded in transferring technology that rapidly
improved field and processing productivity. Competitive prices and excellent quality increased demand
and led to subsequent expansion. Between 1956 and 1966 yields rose from 27Vha to 40 Vha and total
production from25
t to 800
t of fresh fruit (Table
Table 1. Number of processors, acreage, yield,anti production inthe Portuguese tomato sector
Year
Number of
processors
Area
(ha)
Average yield
(Vha)
Quantity delivered
by producers(t)
100
15
Tomato paste
(t)
100
100
15
Source: Portas et al., 1986
The Mediterranean summers offer favorable conditions for growing tomato; they are dry and warm, but
not too hot for good fruit set and color.
During the expansionperiod (1956-1'966) tomato cultivation spread beyond the Tagus valleyto Alentejo
and to the northern andwestern regions of Portugal. Many newcanneries were built; processing capacity
continued to increase during 1966-1970, until it exceeded supply of raw material. The crop was
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introduced in marginal areas with lower productivity and quality. Increased competitionfor supply of raw
material and a fluctuating market leveled production at values lower than the peak in the early 1970s
(Table 7). The social and economic turmoil following the radical political changes in 1974-1975 led to a
further decline.
According to Portas et al. (1986) the factors that contributed to the expansion of production areas and
increase in the number of processing plants were: (a) suitable climate and cheap labor; (b) the need for
alternative crops in the new irrigation systems; and (c) interest of multinational food companies in
developing the industry.
Research also contributed to the success of the industry. In 1970 a research project was established
under the leadership of the University of Evora with funds provided by the national board for scientific
and technological research, JNICT,in cooperation with the agricultural division
of H.J. Heinz in Portugal.
The priorities of the project were: identification of the most suitable locationsfor tomato crops, testing of
new varieties and irrigation techniques, and improvement of farm mechanization. Some of the most
significant achievements of the project were: (a) introduction of modern cultivars with firm fruit and
concentrated harvest; (b) reduction of manual harvests from 4-5 to 2 with bulk transport; and (c) design
and constructionof mechanical harvesters, someof which are even exported.
Tomato growers have contracts with processors that enable
them to obtain financial assistance from
banks. Prices are standardized throughout the country; competition between canneries for raw material
supply is therefore based on transport subsidies. Initially, as contracts were based on acreage, produce
from a tomato crop contracted to a processor could be sold to several others. In the past only an
estimated
of the fruit was sold to the processing plants (Portas, personal communication), the
remaining 20% was delivered to the fresh market, specially in areas with early production. Contracts
were subsequently drawnup on the basisof tonnage to check the practiceof delivery to the freshmarket
and non-contracting canneries. This ensured supply of the required quantity
raw material. Such
deliveries to the fresh marketwill continue until the needfor mechanical harvesting and labor costs make
sorting of fruit for the fresh market unprofitable.
The high subsidies granted by the European Economic Community (EEC) between the mid-1970s and
1987 for tomato processing in its member countries penalized imports from Portugal. The industry
of tomato paste producedin Portugal.
survived owingto the high quality and low cost
in the European Community (EC)in June 1986 hada positive effecton the development
of its tomato sector. The Portuguese quotaof 120
t of tomato paste (equivalentto 600
t of fresh
fruit) was filled in 1988 and 1989 and a new quota of 160
t was negotiated for 1990. Tomato
production is flourishing once again, but high costs and labor shortage are threatening growers who have
not fully mechanized their operations.
II.
- Frozen peas
Within 7 years, Portugal, once a net importer of frozen peas, has become self-sufficient and an exporter.
The pea processing industry ranks second in importance
to tomato.
During the 1960s frozen peas sold in Portugal were largely imported despite low consumption. The
freezing industrywas almost inexistent; small quantitiesof low-quality, hand-picked peas intended for the
fresh market were frozen by artisanal methods (Frazão, 1985).
In the early 1970s consumption rose rapidly. A
development of a pea freezing industryto supply the domestic market.
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to cut impÓrts prompted the
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134
Pea processing started in the coastal area north of Lisbon near Lourinha, and Aveiro. The mild winter
and cool spring are suitedto the nonirrigated pea crop which is harvested in June before the warm JulySeptember period. Moreover, the region has several .fishing harbors and dynamic fish freezing enterprises that
are interested in diversifying into horticultural products.
The JNF supported the establishment
of the pea freezing industryin the region by transferring technology
to both growers and freezing plants. The industry developed rapidly and
within years (1973-1980)
Portugal became self-sufficient although domestic consumption doubled (Table 2). Production and
consumption of frozen peas decreased slightly during the 1980s paftly due to the introduction of other
frozen vegetables on the market.
Table 2. Production, import, export,and consumption (in tons) of processed
peas in Portugal
-
Y
Consumption
(t)
(t)
1973-1 974
1 076
3 670
1975-1
976
3 124 339
1977-1
978
1979-1 980
1985-1
986
1987-1
988
(t)
2
4 681
2
41
5 422
5 100 585
2
39
7 646
9 750
1 123
234
10 639
n.a.
291
n.a.
1981-1
750 8 982
1983-1 984
(t)
n.a.
5 475
n.a.
n.a.
7 896
175
8 066
200 6
181
4
6 377
The success of pea cultivation in a region with smallholdings, poor mechanization, and traditional
agriculture can be attributedto several reasons: (a) restrictions on pea imports
to support the Portuguese
industry; (b) contracts based on standardized prices between growers and processors so that growers
are guaranteed purchase of their produce at a preset price and can therefore avail of short-term
financing when needed;(c) trained extension staff giving recommendations on the choice
of varieties and
crop production technology; (d) suitability of pea crops to the existing farming systems as they can be
grown at competitiveprices in smallplots with a low levelof mechanization.
The main component of the farming system in the pea-growing area is the milk cow, which feeds on
maize in summer (June-October) and grass in winter (October-February). Spring potato (February-June)
is the traditional cash crop. Pea
could replace potato as the cash crop without changing the system. Pea
offers other advantages: (a) no irrigation is needed; (b) sowing can be done with very simple drilling
machines; (c) the crop leaves some nitrogen in the soil; (d) harvesting is cheap and does not require
sophisticated equipment,as the peas are shelledat the processing plant.
Since import restrictions were the major factor for the development of the sector, fears were expressed
about its survival in an open market once Portugal
ioined the EC. However, the improved qualityand low
production cost of Portuguese peas, and the high cost of transporting frozen peasfrom Western Europe
still make pea freezing profitablein Portugal.
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111.
- Canned pea beans
During the tomato boom in the 1960s H.J. Heinz, one of the leading tomato canneries, attempted to
introduce pea bean processing in Portugal (Weber de Oliveira, personal communication). Pea beans are
a popular food in England and are mostly imported from the United States. The objective
of the company
in growing and processingpea bean in Portugal was to diversify
supply of raw material andto extend the
processing periodof the tomato cannery.A minimum annual inputof 1000 tof pea bean was needed for
this new activity to be successful (Weber de Oliveira, personal communication).
The main tomato-growing regions along the Tagus valley in
and
Alentejo were not suitablefor pea bean.
The warm summer induced poor quality because moisture content at harvest was 6-7% compared with
13-14% in coastal regions with a cool summer. Aveiro, located on the northwest coast, was the site
selected for the pea bean industry. (This was oneof the regions where cultivation of pea for processing
was introduced subsequently.) Pea bean
is known in the Aveiro region and suitedto the local climate.
Experiments were conducted to test new varieties with concentrated harvest and to improve crop
production technology. The tests showed high productivity and quality. However, despite good crop
adaptation, availabity of contracts, and a ready market, the industrydid not develop and the project was
soon abandoned.
Unlike pea, growersdid not accept pea bean becauseit was difficult to adjust it to the dominant farming
system. Pea can easily replace potato but substitution of pea bean for maize would modify the balance of
the farming systems. It requires a high income to purchase the maize needed to feed milk cows. The
cannery could not afford to pay such a high price for the raw material if it had to remain competitive in
export markets. The need for irrigation in June and July increased production costs. Early planting was
tested but the crop still needed
to be irrigated once twice.
The pea bean project shows that good productivity and quality, stable contracts, and demand are not
enough for an industry to succeed. Poor adaptation to the prevailing farming system can lead to
excessively high production costs.
IV.
- Other frozen vegetables
New freezing plants were established following the successof the frozen pea industry during the 1970s
and the growthin consumption of frozen vegetables. Initially, pea freezing plants also processed fish; the
new processing plantsno longer processed fish,so that other vegetables were needed
to extend the pea
processing season. Difficulties in finding alternative commodities and the slow down of the Portuguese
economy during the 1970s raised serious financial problems for the new processors.
Increased consumption of frozen vegetables led to renewed interest in the development of the frozen
foods industry in the early 1980s. In 1986 the Luso American Development Foundation (FLAD) fundeda
collaborative R&D project involving national agricultural organizations (IAPA, INIA) and the processors
(Fragoso, personal communication).
Major outputsof the project were: (a)a market study that identified the most appropriate commodities for
export; (b) selection of varieties for better yields and freezing quality; (c) improved crop production
techniques; and (d) transferof technology to growers and processors.
A suitable calendar for year-round production of freezing vegetables was established by integrating the
experience of processors in domestic and export markets (Table 3). Field experiments were conducted
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to improve variety adaptability and cropping techniques
for nine commodities. However, despite good
quality and a market need, the industry could not be developed because raw material could not be
supplied at competitive prices.
-- -
--
l'able 3. Calendar for year-round productionof vegetables for processing
Commodity
Cauliflower
Jan
Feb
Mar
X
xx
Jun
-- -
-
Nov
Jul
xx
Pea
Strawberry
xx
Broad bean
Green bean
xx
xx
X
X
xx
Sweet corn
xx
Sweet pepper
xx
Broccoli
xx
xx
X
xx
xx
xx - regular season; X - extended season
Source: IAPNFLAD, 1989
The coastal area is the most important region for production of frozen vegetables. It has a suitable
climate and most freezing plants are located along the coast. But vegetable cultivation-unlike pea
crops-requires major changes in the existing farming system, which tends to increase production costs.
The price offered by processors for some commodities was insufficient in relation to the cost of
production in scattered and inadequately mechanized smallholdings.
Broccoli, cauliflower, and sweet pepper do not require mechanical harvesting. But competition with the
fresh market reduces supply to processors.
Sweet pepper could be moved to areas suitable for
processing tomatoes, but growers prefer tomato to sweet pepper because of higher income and fewer
production problems.
Green bean requires mechanical harvesting. Competition with the fresh market does not exist since the
varieties used for processing are not suitable for fresh consumption. Processors are supplying growers
with mechanical harvesters, making the crop economically viable.
Small, low-quality strawberries that
are unsuitable for the fresh market are
used for strawberry paste and
bulk frozen fruits. Individual quick freezing (IQF) is a promising method for export markets (Palha,
personal communication). However, it maynot be economically viable since IQF products require handpicked high-quality fruit and the price paid by processors for such fruit is lower than that obtained on the
fresh market. Thus,the fresh market and processing industries complement each other.
It is interesting to compare the strategies used by different processors to
problems. All of them use contracts based on
fixed prices.
overcome these supply
The first group of processors concentrates on fish and pea freezing as major activities to which other
commodities may be added occasionally. Green beanis one such optionfor which growers are provided
with small-scale harvesting machines
in an attemptto improve quality without raising production costs.
The second group of processors is exclusively interested in frozen vegetables, including peas. It is
highly dependent on commodity diversification and crop mechanization to lower production costs. The
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processors have serious difficulties in purchasing enough raw material when the fresh market prices
are
high, in spite of the contracts signed with growers. Processors in this group try to contract fully
mechanized cropsto lower production costs and
to reduce competitionwith the fresh market.
to the
The third group is represented by the cooperative that uses freezing as a complementary activity
fresh market for most commodities. This typeof cooperative processes surplus dueto overproduction of
vegetables. The price paid to growers is based on the quality of the product and time of delivery; the
same average price is paid for fresh market and processing vegetables. This strategy may
be interesting
for fresh market growers with surplus production, but itis not very effective for developing a vegetable
processing industry becauseof the unstable quality and price of raw material. When yieldsare low and
fresh market prices rise, the cooperative has serious difficulties in processing the minimum quantity
required to supply domestic andexport markets.
-
~
Final remarks
The four casesof the vegetable processing industryin Portugal show that availability
of good quality raw
material at low prices is a key factorof success.
Pea and green bean crops usually require large areas and fully mechanized operations. Fresh market
and processing are distinct activities and belong to different farming systems. However, in certain
conditions, vegetablesfor processing canbe grown on small farmswith a low degree of mechanization if
the cropis suited to the farming system.
Fresh market and processing can be combined as complementary activities for other commodities.
Broccoli and sweet pepper, for instance,do not require mechanical harvesting and the surplus from the
fresh market can be used for processing. However, competition with the fresh market can reduce the
supply of raw material for processing when fresh market prices are high and there is no surplus
production.
In the case of asparagus and small fruit (e.g., raspberry, loganberry, and sometimes strawberry) fresh
market and processing must be combined. The high cost of hand-picking makes it unprofitable to
produce a crop exclusively for processing.
be a viable and profitable enterprise in this case, crop
production should combinesale of high-quality produce at fluctuating prices to the
fresh market with that
of lower-quality surplusat stable pricesto processors.
The increasing demand for high-quality frozen fruit and vegetables offers some opportunities for
processing hand-picked commodities. In this case an efficient combination of fresh market and
processing is needed. Crop diversification would extend the processing season and freezing would be a
if dual purpose varieties are used.
suitable alternative for fresh market surplus
l
References
0 Frazão (C.), 1985.- A evolução da cultura da ervilha em Portugal.- Paper presented at the Primeras Jornadas
Tecnicas da Ervilha para Industria.- Lisboa, Portugal:APHF.
O IAPNFLAD, 1989.- Produtos Hortofruticolaspara a Industria
Congelação.- Lisboa: IAPNFLAD.
O Portas (C.M.), Costa (P.C.), 1980.- Produção, comercialização e consumo horticola em Portugal Continental.Lisboa, Portugal: Assoc. Estudantes de Agronomia.
O Portas (C.M.), Oliveira (W.), Stilwel (M.), Calado (A.), Dias
Ruiz-Altisent (M.), 1986.- The tomato processing
industry in Portugal.- Horf. Science 21(1):18-20.
O
(J.A.C.), Cardoso (F.V.), Cordovil (F.C.), Lopes (R.C.), 1986.- Produto agricola bruto do continente, regiões
e concelhos.- Oeiras, Portugal: INIAER (Instituto Nacional Investigação Agraria)/DCP (CadernosNPR 1
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